September 16, 2017

Here’s When a $95 Airline Credit Card is Definitely Worth It

Credit cards are often a confusing subject, especially considering the huge variety of cards available and the eagerness of banks to open new accounts for customers. The public’s goal should be to extract more value from credit card companies that we pay in fees. Every major airline has their own credit cards, and if you fly more than once a year it can make financial sense to carry these cards. I want to point out two disclaimers before I explain. First, if you have credit card debt, pay off your entire balance before even considering opening additional lines of credit. Second, here’s a guide to the basics in what to look for in credit cards.

A lot of people see a credit card with an annual fee and run. Before you immediately say no, look at the details of what you’re getting from the card. If you fly a particular airline more than once a year and don’t have elite status, the credit card perks often outweigh the annual fee. Here are some examples:

United MileagePlus Explorer Card

The United MileagePlus Explorer Card is one of United’s entry-level credit cards. The standard sign-up offer is 40,000 United miles after spending $2,000 in the first three months and the card earns 2X miles per $1 on United purchases. This isn’t a particularly amazing sign-up bonus or earning rate these days, but that’s not what we’re focusing on.

The primary card member and one travel companion get their first checked bags for free on United flights. United normally charges $25 per bag. If you take two roundtrip flights a year on United with your spouse, you’ll have saved a combined $200 in bag fees. The second notable perk is priority boarding. United has 5 boarding groups. Card members are automatically in boarding group 2. The earlier you get on the plane, the more overhead bin space you have to store your carry-ons. The Explorer card has an annual fee of $95 per year. So if you’re saving $200 a year on bag fees and you’re less stressed about your carry-ons, not to mention a host of smaller perks I didn’t mention, it can make sense to pay the $95 fee.

Citi AAdvantage Platinum Select Card

This Citi card is American’s version of the United card above and also has a $95 annual fee, which is waived the first year. If you fly American with any regularity this can definitely be worth it. You’ll get a 30,000 mile sign-up bonus after spending $1,000 within the first three months, you’re first checked bag is free on AA flights (normally $25 per bag), you get preferred boarding, and you get 10% of your AA miles back when you redeem them for award flights.

Gold Delta SkyMiles Credit Card

The Gold Delta card from American Express offers the same perks as the standard United and AA cards. You’ll get 30,000 miles after spending $1,000 in three months and a $50 statement credit after your first Delta purchase within three months. More importantly, you get your first checked bag free (normally $25), priority boarding, and save 20% on in-flight purchases.

The JetBlue Plus Card offers even more perks than those mentioned above for JetBlue flyers. Ultimately this comes down to numbers. Calculate how much money you spend a year on bag fees and try to assign a rough value to the stress you save with priority boarding. If you’re getting more than a $100 benefit per year, it likely makes sense to pick up the airline card.

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